Tuesday, May 21, 2024
 
 

The Year of Good Energy?

2022 hopes COVID recedes, climate change answers, price stability
EUROPEAN UNION, 2021/EC - AUDIOVISUAL SERVICE

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The Covid pandemic, geopolitics, climate change, energy and the economy are likely to be key issues in 2022.

“What we have to have when we’re looking at these figures would be the economic debate on the use of all those commodities and the increasing demand,” Justin Urquhart Stewart, co-founder of Regionally in London, told NE Global, asked about the oil and natural gas prices for 2022. “And then the second point is geopolitical because we have never seen so much political angles on this having such effect and obviously this particularly gas, Russia, Nord Stream 2 and the – unofficial not really talked about – intercountry blackmail but in terms of border with Ukraine and the gas prices. (Russian President Vladimir) Putin will play this very effectively over the next year. What impact that’s going to have on prices? I should expect to see prices probably rise,” Urquhart Stewart argued.

According to the London-based expert oil prices will move towards $100 per barrel and the gas prices will not weaken any time soon. “We’re heading to the coldest part of the year, and I think prices will be maintained at a high level until the level of confidence that political stability or relations with Russia is developed successfully which is unlikely,” he said.

Chris Weafer, co-founder of Macro-Advisory in Moscow, told NE Global the two most important factors for the oil price in 2022 will again be Covid-19 and OPEC+. “The former, especially if the Omicron variant forces extended travel and business restrictions, will continue to hang over demand assumptions and lead to frequent scares,” he said, adding that it seems inevitable that a return to pre-Covid demand volume will be seen later and more likely not until 2023.

Urquhart Stewart said the economic recovery should continue. “The V-shaped recovery is a loser that’ s just bouncing back from a terrible position. If we want a letter of the alphabet, it’s probably going to be not a capital but underscore ‘w’. It’s going to be going up and down, up and down, up and down, on a relatively small scale and it will be driven by geopolitical issues and, of course, the pandemic issues. This is an area completely unknown,” he said, adding that investors should expect higher oil prices and gas prices staying roughly where they are for the time being.

Turning to natural gas prices, Weafer believes the EU gas price will stay high in the first half of 2022 but does not see a crisis as such.

According to the Macro-Advisory co-founder, the price of gas will inevitably stay high in the first quarter and into the second quarter because inventories in Europe are low and demand will be high through the winter months. A colder than usual winter would push prices even higher.

Weafer expects demand to remain high into the spring and summer, rather than fall as usual, because countries and gas companies will want to rebuild the storage tanks that they let fell to low levels last winter. He expects the price of gas to be a lot lower this time next year and coming into 2023, as Russian supply will be higher with the Nord Stream gas pipeline from Russia to Germany and with the continued use of the Ukraine transit route at least until end 2024.

 

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Co-founder / Director of Energy & Climate Policy and Security at NE Global Media

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